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Pricing the tablet: How high can they go?


With the Apple tablet due to be announced next Wednesday, we've been seeing a lot of possible price points thrown around. Will the tablet retail for $999? Or is a $699 or $799 unit in the cards? It's really hard to say because as with all retail, both price and value depend a good deal on supply and demand, as well as on any deals Apple has with potential data providers.

Take the iPhone for example you can buy a contract-free 32GB iPhone 3GS at the Apple store, for a rather steep $699. Apple doesn't make this easy for you. I found you had to search by model number (namely 718LL/A, for the screen shot shown here) rather than by the 3GS model name. Apple isn't exactly pushing AT&T-free models at their store, and I think the price here reflects that.

You can pick up a 64GB iPod touch for $399 shipped, today. What makes the 32GB iPhone with just half that memory worth $300? In my opinion, it's Apple's way of dissuading customers from purchase. Slap a premium on the price, keep customers away. What's the true value of a phone? An informal survey in the TUAW newsroom came up with a figure of $50, mostly by waving our hands in the air.

Looking at standard phones in the market, we decided that $50 could easily cover a retail assessment including 3G data reception, built in GPS, and a built in magnetometer. That would make a "real" market price for the 32GB iPhone hover at about $349, namely the price of a current generation 32GB iPod plus $50 in phone extras, namely half the price of what the current unit sells (or, more likely, and quite deliberately, fails to sell) at.

So what does it take to go from a phone to a tablet? And I say phone, because I think it's likely that the tablet will ship with some sort of data plan option. I think the same sort of math applies. I wouldn't be surprised to see a $999 tablet be announced next Wednesday with a $699 deal for anyone who signs up for a two year data plan at, say, $39.99/month.

In other words, I think it could be likely that Apple will push high on their initial price, moving that price downwards as early adopters give way to regular consumers later this year during pre-Christmas Q4 sales. As much as I want my $699 contract-free tablet, I don't think Apple's is anywhere near being on board with that low number.

So what's your take on this? What will be the contract-free price? What kind of discount do you anticipate if the tablet comes with a data plan, and what monthly charge do you think the market is willing to take on for that data access? Let us know in the comments.

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